A sign at the Opel plant in Bochum, Germany, on Monday read: “Future for all at Opel Bochum,” with a sign underneath saying, “And you?”

Frank Augstein, Associated Press

Opel to end production at German plant in '16

Article by: JACK EWING

New York Times

December 10, 2012 - 7:16 PM

FRANKFURT, GERMANY - Opel, the unprofitable European unit of General Motors, confirmed Monday that it will stop producing cars at its plant in Bochum, Germany, in 2016, a sign that even the Continent's most powerful economy cannot escape the effects of the eurozone crisis.

The end of car manufacturing at the 50-year-old plant in the Ruhr Valley was expected as GM tries to contain losses in Europe that the company has said could be as high as $1.8 billion this year.

But GM's announcement that it had made a final decision on the factory's fate still caused shock waves in Germany, which has so far narrowly escaped the downturns and rising unemployment afflicting countries like Italy and Spain.

It also served as the latest reminder of how the eurozone debt crisis has undercut the region's economy. Car sales in Europe have fallen steadily since 2007 as buyers have had a harder time getting loans, lost their jobs or were reluctant to make big purchases. Carmakers are expected to sell about 12.5 million vehicles this year, down from 16 million in 2007.

Opel said it was necessary to close the Bochum factory, which makes the Zafira Tourer minivan, because of "the dramatically declining European automobile market and the enormous overcapacity in the European automobile industry."

The company said it hoped to avoid layoffs in Bochum by expanding a distribution center at the site, by making components there and through early retirements and buyouts. Nevertheless, the decision was ominous for the 3,000 workers at the plant and for Bochum, where Opel is the largest private employer and the jobless rate is already nearly 10 percent.

Ottilie Scholz, the mayor of Bochum, a city of 374,000 people, accused Opel's management of not negotiating in good faith about the future of the plant. She called GM's decision "a bitter loss for the city and the region." The decision came days before a planned celebration of the plant's 50th anniversary.

Opel labor representatives, who in recent months had toned down their rhetoric toward GM management, reacted angrily to the decision and said they would continue to fight to keep the plant open. Wolfgang Schaefer-Klug, chairman of the Opel workers council, said in a statement that Bochum workers were being forced to suffer the consequences of "decades of management errors and lack of a consistent corporate strategy."

Makers of mid-priced cars, including Opel, Fiat and PSA Peugeot Citroen, have been hit the hardest by the industry downturn, forcing them to close factories or cut jobs despite severe resistance from unions and political leaders.

Fiat said Friday that it would lay off 1,500 workers out of about 4,600 at a plant in Tychy, Poland, which manufactures the Fiat 500 and other models for the European market. Even though the 500 is one of the Italian carmaker's most popular models, demand is so weak that the Tychy plant will produce only 300,000 vehicles next year, half as many as in 2009, sFiat said Fiat, which is based in Turin, Italy.

Start of the downturn

In 2008, when the auto industry downturn began, many countries including Germany and France offered tax credits or other incentives to encourage people to trade in old cars for new ones. But those stimulus measures merely postponed a reckoning with overcapacity problems that predated the financial crisis.

European governments, which are focused on reducing debt, have shown no inclination to bail out Opel or other carmakers once again.

Georg Streiter, a spokesman for German Chancellor Angela Merkel, offered only words of sympathy Monday.

"The chancellor and the government regret this decision," Streiter told reporters in Berlin. "It's a severe blow that affects a lot of people and their families and the Bochum region as well."

Streiter gave no indication, however, that the German government would intervene, saying only that he expected "that the parent company General Motors will do everything possible to find socially acceptable solutions" regarding the future of the plant's employees.

The crisis has had much less effect on makers of German luxury cars, but their immunity seems to be wearing off. Audi, the luxury car unit of Volkswagen, said Monday that global sales in November rose 10.9 percent compared with a year earlier, or 123,600 automobiles. European sales fell 2 percent, however.

Bayerische Motoren Werke said Monday that sales in November rose 23 percent worldwide, to 170,932 cars. That included a 10 percent increase in European sales. But BMW has warned that it could also be hurt by plunging sales in countries like Spain.

The end of car production at the Bochum plant was no surprise after Opel said in July that it would not produce the next generation of the Zafira Tourer minivan there when the current model's life cycle runs out.

Workers had hoped they would be able to persuade GM to produce another model in Bochum, but GM ruled that out Monday.